‘We will get to near zero net automotive debt by FY24’

Global operational challenges such as war, semiconductor shortages and the pandemic have fast-tracked some of the important future trends of the global automotive industry, said N Chandrasekaran, Chairman, Tata Motors, in the FY22 annual report of the company.  

While such global challenges have had a severe impact on businesses, future trends such as shift to green mobility, a stronger supply chain, accelerated digitalisation and access to global talent pool, have seen accelerated adoption.

“Recent history has been relentless with the global pandemic, military conflict, growing inequality, supply-chain shortages and more. Decades of experience has been squeezed into two dizzying years. Businesses have had to cope with this unprecedented sequence of events with speed and agility,” said Chandrasekaran.

“While these changes have had a serious impact on businesses and communities, they have also accelerated some important trends for the future: 1) energy transition – irreversible move to green mobility; 2) Supply Chain Transition – rebalancing of supply chains to become resilient; 3) digital transition – Artificial Intelligence and Machine Learning becoming mainstream; and 5) talent transition – coming of age of the talent cloud – a diverse, inclusive, global talent pool that can be accessed remotely,” Chandrasekaran further added.

Vehicle sales

Tata Motors group comprising Jaguar Land Rover (JLR), Passenger Vehicle (PV) and Commercial Vehicles (CV) saw 1.08 million vehicle sales in FY22, a growth of 20 per cent over FY21 volumes. However, FY22 volumes were still lower than FY19, when the group sold 1.27 million units. Revenues during FY22 also hit a three-year high at ₹2.78-lakh crore. At the consolidated level during FY22, Tata Motors brought down its loss by 15.6 per cent to ₹11,309 crore and by 42 per cent to ₹1,391 crore at the standalone level compared to FY21.

“Despite the margins being impacted by supply chain issues and runaway commodity inflation, our India business ended with strong free cash flows of ₹1,879 crore. We are committed to restoring the profitability of this business as it returns to competitive growth and inflation stabilises,” Chandrasekaran added.

With the Tata Motors Group having three independent business units, JLR, PV and CV, it is able to offer differentiated value propositions to different customer segments while leveraging backend and corporate synergies.

“This has made Tata Motors lean, nimble and customer-centric. Each of these businesses are self-sustaining, which gives me the confidence that we will get to near zero net automotive debt by FY24,” Chandrasekaran added. Tata Motors’ net automotive debt shot up by 19 percent in FY22 to ₹48,679 crore, primarily on account of working capital.

FY22 also saw the formation of two new subsidiaries — Tata Motors Passenger Vehicles (PV) and Tata Passenger Electric Mobility (EV).

The PV division recorded its highest-ever domestic annual sales of 3,70,354 units in FY22. Overall domestic market share increased to 12.1 percent (+390 bps versus FY21) and further to 13.4 percent in Q4 FY22.

In EVs, the company registered its the highest-ever annual sales of 19,105 units in FY22 (up 353 percent versus FY21) with penetrations touching 7.4 per cent by Q4 FY22.

“While the near-term outlook is fluid with multiple challenges that I outlined above, the business is taking the right actions to navigate them, and I am confident that we will emerge stronger,” Chandrasekaran added.

Published on June 12, 2022